LTV (Lifetime Value)

LTV (Lifetime Value) is the total gross profit a company expects to earn from a customer across the entire relationship. A common form is average revenue per account multiplied by gross margin and by expected customer lifetime, where lifetime is the inverse of the churn rate. It is the numerator of the LTV/CAC ratio and the anchor of SaaS unit economics.

It matters because LTV is highly sensitive to its retention assumption. A small change in assumed churn moves the expected lifetime sharply, so an optimistic input can make a structurally unprofitable cohort look healthy on a slide. That is why LTV is best read against actual cohort behaviour rather than a single blended figure.

Closelooknet reads LTV as a claim to be cross-checked, not a headline number. In the SaaSpocalypse thesis, agentic pressure on seat counts and pricing power is exactly the kind of force that can compress LTV even while reported revenue still grows.

In practice, an account paying $1,000 a year at 80% gross margin with a five-year expected life carries an LTV near $4,000; if rising churn shortens that life to three years, the same account is worth about $2,400, a 40% cut from one change in a retention assumption.